Great Britain formally acquired possession of Malta in 1814. The island staunchly supported the UK through both world wars and remained in the Commonwealth when it became independent in 1964; a decade later it declared itself a republic. Since about the mid-1980s, the island has transformed itself into a freight transshipment point, a financial center, and a tourist destination while its key industries moved toward more service-oriented activities. Malta became an EU member in May 2004 and began using the euro as currency in 2008.
Malta - the smallest economy in the euro zone - produces only about 20% of its food needs, has limited fresh water supplies, and has few domestic energy sources. Malta's economy is dependent on foreign trade, manufacturing, and tourism. Malta adopted the euro on 1 January 2008.
Malta has weathered the Eurozone crisis better than most EU member states due to a low debt-to-GDP ratio and financially sound banking sector. It has low unemployment relative to other European countries, and growth has recovered since the 2009 recession. In 2014 and 2015, Malta led the Eurozone in growth, expanding by nearly 3.5% each year. Also in 2014, the government began promoting public-private partnerships in the healthcare sector to establish Malta as a Mediterranean health hub for medical tourism, reduced residential and commercial energy tariffs by 25%, and implemented a citizenship purchase program to increase government revenue and attract foreign investors.
Malta's geographic position between Europe and North Africa makes it a target for irregular migration, which has strained Malta's political and economic resources. Malta's fertility rate is below the EU average, and population growth in recent years has largely been from immigration, putting increasing pressure on the pension system. The government has implemented new programs, including free child care, to encourage increased labor participation. The high cost of borrowing and small labor market present potential constraints to future economic growth.